This is the only way to halt house prices surging and alleviate the supply shortage

This means that prices are rocketing at such at enormous pace because there are far too many people competing for the very little affordable housing there is left across the country.

Meanwhile, Prime Minister David Cameron’s Conservative government is trying to stimulate the housebuilders and push for thousands of new affordable starter homes for the lowest earners in the country.

But this is all for nothing unless the government does one thing soon — stop helping people get on the ladder with cheap funding.

Yes — I am even talking about the lowest earning families in the country.

Now, hear me out.

Unaffordable housing is going to get even more unaffordable

Everyone is moaning about how house prices are becoming “unaffordable.” Now this is very true.

The Royal Institution of Chartered Surveyors said in its RICS Residential Survey for October that “if the five year projections from members regarding the outlook for both prices and rents is anything to go by, property is set to become even more unaffordable going forward.”

When building houses is not enough

Not only does this mean that the earnings to house price ratio is climbing steadily, it means that buying a house is getting out of reach for the ordinary Briton, let alone the poorest in society.

So Cameron’s government
scheme of Help to Buy was set up to help people get on the ladder while those all important houses are being built. Help to Buy means people can rustle up just a 5% deposit while the government provides up to 20% of the price of a home. This makes buying a house affordable for a whole new group of people and for those who don’t even earn that much.

Mortgages are even more affordable at the moment because interest rates are still at a record low of 0.5%.

But Britain can’t have it all. And the government’s push to help people with funds to get on the housing ladder is really just hurting people in the long run and is potentially undoing all its work in trying to get more houses on the market.

At the end of 2014, the Confederation of British Industry (CBI) warned that 240,000 properties need to be built annually, in order to accommodate rising demand across the country. Unfortunately, over the last 14 years, over 200,000 homes have been delivered annually in just four periods.

But Paul Bogle, head of policy and research at the National Federation of Builders hit the nail on the head for why people still won’t be able to afford those houses anyway in this BBC Radio 4 Today programme (emphasis ours):

“There are parts of the bill that will encourage development but that’s only one part of the equation.

“The homes that are being built and will be built will not be affordable, so the idea they are affordable homes is a misnomer.

“We have a supply problem and a lot of the measurements that the government has done has focused on stoking demand. So whether it is Help to Buy for a new buy, first buy, cheaper mortgage rates and Funding for Lending for the banks that allow them to offer cheaper mortgages those will allow people to move into buying homes.

“So if you’re on the housing ladder that’s easy for you but trying to get on [the ladder], it’s going to be more difficult [because of increased demand] and your earnings aren’t increasing at the pace of house price increases.”

So what are the options? There’s none really — other than putting the brakes on helping give people cheap credit to get on the housing ladder.

Why? Well, because if the government doesn’t, it’s going to make building those houses all for nothing as they will be even more unaffordable than they are now and keep the very same people who can’t get on the housing ladder already, off the market permanently.

There needs to be breathing room for prices to cool down, and for houses to be built, so tbuying a home becomes affordable for poeople again.

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